SAO PAULO, Brazil_Rules restricting ownership of Brazilian airlines should be relaxed to let foreign companies control much larger stakes, a leading government aviation official said Friday.
The limit on foreign participation in Brazilian airlines should be boosted from the current 20 percent to 49 percent, said National Civil Aviation Authority President Milton Zuanazzi, according to the Agencia Estado news service.
"Twenty percent is a very small amount," Zuanazzi said, adding that a bill proposing such a change is being presented in Congress.
Raising the cap on foreign ownership would likely increase foreign investment in South America's largest air travel market. It could also help struggling airline Viacao Aerea Rio-Grandense SA, or Varig, regain market share it lost after it imploded under crushing debt last year.
Last month Chilean carrier LAN Airline SA offered US$17 million (€12.9 million) in credit to Varig. But current laws limit LAN or other companies from more aggressive moves to help Varig try to regain its spot as Brazil's top airline, such as pumping cash into the company in return for a larger stake.
Varig was Brazil's largest airline and the nation's flagship carrier until financial troubles led it to be auctioned off last year in bankruptcy proceedings.
Brazil's largest carriers are now Tam Linhas Aereas SA and Gol Linhas Aereas Inteligentes SA.